Stocks on Bursa Malaysia closed broadly lower yesterday in tandem with Asian markets which traded mostly lower, affected by China’s announcement to cut its economic growth target, and continued selling in most heavyweight counters dragged the benchmark FBM KLCI to close 19.45 points or 1.07% lower at 1,806.09 after fluctuating between 1,805.80 and 1,819.67 throughout the day. CIMB and SKPETRO were the top two losers, declining 21 Sen and 19 Sen each to RM5.72 and RM2.45 respectively; bringing down the index by a total of 5.08 points. Losers outpaced gainers by 556 to 288 with 292 counters traded unchanged. Total volume rose to 2.14 billion shares worth RM2.4 billion, from2.12 billion shares worth RM2.2 billion transacted on Wednesday.
Taking cue from the losses on Wall Street overnight, the FBM KLCI opened 5.88 points lower with a downside breakaway gap at 1,819.66 and slipped lower throughout the day on heavy selling pressure. The key index hit an intra-day high of 1,819.67 briefly after opening and touched an intra-day low of 1,805.80 at mid-afternoon and rebounded. However, a last minute sell down dragged the index to close near the low of the day. Chart-wise, the FBM KLCI formed a bearish long black Marubozu-like candlestick which indicates heavy selling pressure and the bears were in control for the day in driving the FBM KLCI lower. Hence, the FBM KLCI is likely to slide lower today on continued selling pressure. Immediate downside support zone is at 1,805 to 1,800, while the overhead resistance zone is at 1,819 to 1,825.
MACD turned downward and its histogram also extended southward, indicating an increased in the bearish downward momentum. RSI (14) fell to 52.1 from 64.6, indicating a changed in the key index’s short term relative strength from a bullish state to a mildly bullish state. Stochastic hooked downward to 81.8 from 90.1 and made a dead-cross over the slow stochastic line, indicating an end to the short term up cycle and the possible beginning of a down cycle. Readings from the indicators showed that the FBM KLCI is facing a change in momentum from bullish to bearish for the short term, and is likely to further correct downward.
With the bearish downward move yesterday, the FBM KLCI has closed below the short term 5, 10, 15, and 20-day simple moving average (SMA), indicating an end to the recent short term uptrend and the beginning of a correction phase. Nevertheless, the medium term trend is still up, while the long term trend is turning sideways as indicated by the long term moving averages that are turning flat. For today, the FBM KLCI is likely to stay in consolidation with a bearish bias.
Overnight, the Dow rebounded 38.82 points or 0.21% to close at 18,135.72. Today, the FBMKLCI is likely to trade within a range of 1,787 to 1,833.
This week's expected range: 1788 – 1846
Today’s expected range: 1787 – 1833
Resistance: 1815, 1824, 1833
Support: 1787, 1796, 1801
Stocks to watch: ECS, EG, INARI, KNM, KSL, LONBISC, MUDA, MULPHAL, NTPM, OPCOM, POS, SALCON
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